The Daily Telegraph will pay George Galloway £150,000 in libel damages after announcing that it will not appeal to have the award overturned.

The court of appeal ruled that the MP was entitled to the damages after the paper wrongly alleged he had received money from Saddam Hussein's regime.

The judges rejected argument that the story was in the public interest and refused the newspaper permission to appeal to the House of Lords. A spokeswoman said yesterday: "The Telegraph group has decided not to petition for leave to appeal." The paper will also have to pay both sides' costs.